WOMAN WHO RAN ESCORT SERVICE MAY SELL PHONE RECORDS TO PAY LEGAL FEES

PAUL KIEL, TPM MUCKRAKER - Back in October, the feds busted a long-time prostitution service in the Washington, D.C. area. The madam, Jean Palfrey, soon caught attention by telling a reporter from the Smoking Gun that they must be going after her as part of a larger investigation into "some Duke Cunningham-type bigwig client that got caught up in something" . . . Palfrey hasn't actually named a member of Congress. But she seems determined to make it easier for those who want to find out. Though her firm's policy was that "no record is a good record!!" she's now apparently mulling selling her phone records from the last thirteen years to raise funds for her defense.

THIS IS ONE OF THE more novel defense tactics we've heard about. Palfrey's site says, "consideration is being given to selling the entire 46 pounds of detailed and itemized phone records for the 13 year period, to raise the requisite defense funds. An example from a randomly selected 6 day period in August of 1996 is available for review now."

JIM MCELHATTON WASHINGTON TIMES - A California woman who is the target in an ongoing criminal probe into the operation of her District-based escort agency has told federal authorities she will "make life miserable" for former customers and employees unless her case is dropped, government attorneys say. "I cannot emphasize to you the terrible and quite unnecessary ramifications this case (civil and/or criminal) will set off, if permitted to advance for both sides," Deborah Jean Palfrey wrote in an e-mail to the U.S. Attorney's Office. "The press will have a field day at each of our expense."

Government attorneys referenced the e-mail in a recent motion to postpone civil forfeiture proceedings against Miss Palfrey pending the outcome of a criminal investigation. But an attorney for Miss Palfrey wants to move forward with the civil case, filing court papers last weekend detailing an attempt to depose former Clinton campaign adviser Dick Morris. Mr. Morris, a news commentator who resigned from the Clinton campaign in 1996 amid a scandal involving escort services, is "the only customer of the service who has publicly admitted using the services for 'legal' sexual activity," Miss Palfrey's attorney wrote in court papers. . .

In recent filings, Assistant U.S. Attorney William R. Cowden expressed concern about what he called Miss Palfrey's "recent threat to harass potential witnesses whose identities remain secret . . . through calculated public disclosures of former customers' and former co-workers' identities." Mr. Cowden also said authorities want to hold off on the pending civil seizure proceedings because it could affect the ongoing criminal investigation. He said Miss Palfrey's attorney wants the government to turn over the names of cooperating witnesses. That could compromise the ability of criminal investigators to gather confidential information, he wrote.

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LARA JAKES JORDAN, ASSOCIATED PRESS - Federal agents have seized more than $427,000 in cash and stocks from a woman accused of running a money-laundering scheme from her Washington-based prostitution business, court records obtained Monday show. The woman, Deborah Jean Palfrey of Vallejo, Calif., could not immediately be reached for comment by The Associated Press. . . Palfrey's clients may have included wealthy doctors and lawyers in Washington and its Maryland and Virginia suburbs, but no well-known names have so far surfaced, said a law enforcement official who spoke on condition of anonymity because the investigation is ongoing. . . The women, all at least 22 years old, told investigators that Palfrey urged them to work for her at least three nights each week and charge their clients up to $300, according to the affidavit. . .

SMOKING GUN - In a TSG interview, Palfrey admitted operating an escort firm, but claimed that her workers did not engage in "illegal sexual activities." There are "a lot of erotic activities that one can do without participating in things that are illegal," she claimed. Investigators contend that after Palfrey hires a prostitute, she sends the woman to a "screening" appointment where she is required to have sex "without payment" so as to ensure that the prospective hooker is not a law enforcement officer. Palfrey, who spoke to TSG from Germany, said that agents raiding her home would have found nothing since she did not keep computerized records and regularly shredded documents. Asked about the nature of her clientele, Palfrey called the identity of her johns a "salacious detail" of which she was unaware. "I never kept records," she claimed. "I protected the client's confidentiality. . . they trusted me." But Palfrey did speculate that she may have come to the attention of federal agents because her operation had somehow intersected with a more high profile case, like that of convicted ex-congressman Randy "Duke" Cunningham. Investigators are reportedly examining charges that a defense contractor provided hookers to Cunningham as part of an influence-peddling scheme. Palfrey did not claim a nexis between her escort service and Cunningham, but invoked the disgraced pol's name while saying that she would wager that the basis for the federal probe of her business "had solely to do with some Duke Cunningham-type bigwig client that got caught up in something and started to say, 'Do you know this?' and 'Do you know that?' And that he might have been able to lead them to somebody." Palfrey, who said she started her service in D.C. because "it's a very liberal, sophisticated, cosmopolitan area," advertised her company as featuring women "23 and older, with two or more years of college education, who either work and/or go to school in the daytime." Palfrey told TSG that she shuttered her escort business in mid-August because her female employees were "driving me crazy. They were a pain in the ass to deal with." She added, "It was just time to start a different life and do different things, move on."